By Desie Heita
Frustration over the laid-back regulatory approach to the telecommunication market, unfair competition and the entry of Switch in particular, may be the underlying factors that led a Norwegian investor to cancel the managing and service agreement for Cell One.
Although executives at PowerCom say “there is nothing sinister or unusual” in ending the agreement with Telecom Management Partner (TMP), they did acknowledge the market perceptions, which hinted that investors in PowerCom were, and still are, unhappy with Namibia’s regulatory framework.
“To be honest, there were issues we are not happy with. Switch came in through the back door and everyone just looked on. [As an investor] you ask yourself: Is this how they do business [here]?” said Dr Leake Hangala, PowerCom board member and Director of Corporate Strategy and Business Development at Cell One.
Frode Haugen, newly appointed Chief Executive Officer of Cell One, said they are still unhappy with industry regulations, the diverse centre of power, especially the Communication Bill that took too long to be tabled in the National Assembly, and the absence of a competition commission.
“We do not think the ground is levelled,” said Hangala, adding that they are “happy that government tried to take action [with Switch]”.
Haugen said the absence of a regulatory body with teeth, and a competition commission has created high entrance barriers for the new mobile network operator.
Hangala said at times, the regulator, Namibia Communication Commission (NCC), seems not to be regulating and consequently questions of cheating, openness and fairness arise.
Topping the list of Cell One’s frustrations is the interconnection tariffs and termination fees between two mobile network operators.
“The difference between the tariffs on own network and interconnection tariffs is too huge. This is the biggest obstacle, a challenge for new mobile entrants in the market,” said Haugen.
The NCC only started setting the interconnection tariffs after protests from Cell One.
“We are still working with the regulator on this,” said Haugen, who thinks the tariff of N$1,60 is too high.
In its quest to develop the second cellular network operations, TMP who owns 39 percent shareholding in PowerCom, spent more than N$600 million in one year. Other shareholders are NamPower, Namibia Mineworkers’ Investment Holdings Company (Nammic), and Old Mutual Namibia. Besides the shareholding, TMP also had the management and technical service agreement to manage Cell One. It is this agreement that was abruptly terminated late March this year.
Hangala and Haugen said there was nothing unusual or sinister about the termination of service agreement.
“As an investor, you decide if you want to be both [shareholder and management partner] or you choose to be one,” said Haugen.
The announcement of management and service agreement termination fuelled industry speculations with suggestions that the entry of Switch may have frustrated the Norwegians to the point of pulling out.
A new management company has not yet been identified to fill the gap but Hangala said PowerCom has a capable and skilled management team to drive the company.
Cell One also has a bone to pick with the NCC on site sharing and number portability, which allows clients to migrate from one network to the other with their old numbers. They also have bones to pick with other authorities, in particular the Ministry of Trade and Industry on the absence of a competition commission, and the Ministry of Finance on slapping the 15 percent tax on pre-paid airtime.
Cell One says through taxing pre-paid time, the Government is marginalising the lowest end of the market, by creating an extra tax burden, while exempting the middle and upper class of the market [individual and corporate contract] from paying tax.